LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)

JGB futures are trading on a low note, currently standing at 148.54, -28 compared to the settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Jibun Bank Services and Composite PMIs.
• Accordingly, local participants are likely to have been on headlines and US tsys watch as they digest the sharp post-payroll sell-off on Friday. Cash tsys are 1.5-4.1bp cheaper with tsy futures at 113-19, -8 versus NY closing levels.
• US Treasury yields seem to be under pressure due to the imminent risk of increased debt issuance following months of disruption, as President Biden signed legislation to suspend the federal debt ceiling. (link)
• The strength of May price rises will lead the BOJ and Governor Kazuo Ueda to make a tough call on yield curve control. (link)
• Cash JGBs are cheaper with yields higher beyond the 2-year zone. Yields are 0.3-2.6bp higher across benchmarks with the futures linked 7-year zone leading. The benchmark 10-year yield is 1.7bp higher at 0.431%. The 30-year JGB yield is 0.7bp higher at 1.281% ahead of tomorrow’s supply.
• The swaps curve bear steepens with rates 0.3bp to 2.6bp higher and swap spreads wider.
• The local calendar tomorrow sees April’s Labour Cash Earnings and Household Spending along with 30-year supply.

• RES 4: 1.2680 High May 10 and the bull trigger
• RES 3: 1.2641 High May 11
• RES 2: 1.2592 76.4% retracement of the May 10 - 25 bear cycle
• RES 1: 1.2545 High Jun 2
• PRICE: 1.2432 @ 06:07 BST Jun 5
• SUP 1: 1.2401/2308 Low Jun 1 / Low May 25 and the bear trigger
• SUP 2: 1.2275 Low Apr 3
• SUP 3: 1.2242 50.0% retracement of the Mar 8 - May 10 bull run
• SUP 4: 1.2213 Low Mar 27

GBPUSD faded into the Friday close and a key short-term resistance has been defined at that day's high of 1.2545. Note too that, despite a brief test above it, the 61.8% retracement of the May 10 - 25 downleg at 1.2538 remains intact. A continuation lower would be bearish and attention would shift to 1.2308, the May 25 low and key support. Clearance of Friday’s high is required to reinstate the recent bull cycle.